ABUJA: Another major threat to Nigeria’s earnings from the oil and gas sector is emerging as the United States (U.S) yesterday lunched her first cargo exporting Liquefied Natural Gas (LNG) to the international market.
Nigeria currently exports 22 million tons of LNG, making it the world’s fourth-largest exporter of the product, but the U.S is fast working on liquefaction projects that would position it for 84.3 million tons yearly capacity, a situation which may shrink the Nigeria’s share of the market.
The US Congress approved the LNG export business last year, and the North American State entered the market this week, as Cheniere Energy Inc. loads the first cargo ever to export LNG out of the country.
Meanwhile, the Organisation of Petroleum Exporting Countries (OPEC) basket price has dropped further to $25.76 per barrel as at yesterday, while the U.S Brent crude fell nearly four per cent to $30.34 a barrel, extending losses over the first seven trading sessions of 2016 to 18.6 per cent.
Besides, four LNG export terminals are now being built in the contiguous US, with a contractually guaranteed combined capacity of 41.4 million tons yearly, equivalent to 5.7 billion cubic feet per day of gas, and potential peak capacity of 51million tons per year, equivalent to seven billion cubic feet per day of gas. Some of the projects have signed long-term capacity contracts and presumably would have a better chance of moving forward even if oil prices remain at current levels.
Experts have expressed concern that the NLNG, which is one of the highly rated exporters in the world, might later lose some of its export market to the United State’s LNG.
The NLNG is currently a major contributor to national earnings, and it has generated some $85 billion (about N17 trillion) from exports since its inception 15 years ago. Therefore, it might become a double tragedy for Nigeria, if the NLNG should eventually lose its markets to the emerging U.S LNG, while it is critically struggling for its sweet crude.
Chief Executive Officer, Frontier Oil Limited, Dada Thomas, said this is a very critical period for Nigeria and the nation needs to look at every available mechanism and cut costs to be able to meets its budget commitments.
He said: “The U.S is becoming an LNG export to the world market today. They have always being an importer of LNG, but now they are going to hit the export market. And remember they can sell to the pacific far than we can. The Congress approved the export one year ago, and a year latter, they have started exporting, it did not take them 10 or 20 years like it takes us here in Nigeria
Thomas, who expressed fear about the free fall in crude oil price which slide to $25.76 per barrel (OPEC basket) yesterday, said that many oil firms may not be able to cope with the low oil price, if it continues for the next two years.
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